A stored value card (SVC) is a card that is presented by a purchaser to a merchant to purchase merchandise at a point of sale (POS) location in lieu of cash, credit card, or other payment method. The SVC card is associated with a pre-paid account having a cash balance. Each time the SVC card is presented at the POS, the account is debited by the amount of the sale. When the cash balance is depleted, the card is typically discarded by the purchaser or card holder.
The SVC card is beneficial to the purchaser as it provides the convenience of a credit or debit card without having to maintain a credit or checking account at a financial institution. The SVC card is also beneficial to the merchant, since it facilitates the sale of merchandise using existing POS systems, and is generally faster and more secure than cash or paper check transactions.
The SVC card has other advantages as well, such as enabling the tracking of purchases by particular purchasers for marketing or incentive programs. For example, instead of providing a paper-based frequent purchaser card, a merchant can automatically track the number or dollar amount of purchases made with a particular SVC card, and reward the purchaser with free or discounted merchandise after making a certain number of purchases or reaching a certain dollar amount.
Nevertheless, the SVC card has its limitations. For example, the purchaser may present the SVC card without realizing that the cash balance is insufficient to complete his or her purchase. If the purchaser cannot provide another form of payment, the sale may be lost. Even if the purchaser can provide another form of payment, the transaction for the sale takes longer, inconveniencing the purchaser and other waiting customers. The purchaser may also fail to get incentive program credit for the purchase that might otherwise have been made using his or her SVC card.